Seeking morality in bastions of greed

October 20, 2002|By Andrew Bard Schmookler

ALBUQUERQUE, N.M. -- So, some of our corporate malefactors are now caught in the coils of the law.

In recent months, commentators have declared that the sight of some of these miscreants in handcuffs would be required to restore the confidence of the American investor. And with trillions of dollars of value flushed down the toilet of this bear market in the last few years, we certainly need all the restoration we can get.

But as glad as I am to see these guys prosecuted, this investor is not feeling so reassured. I worry that the public humiliation of a few officials from Enron and WorldCom will substitute for the more profound transformation of our corporate culture that's needed.

There's good reason to think their misdeeds are but the tip of an iceberg still looming out there. Their example suggests a more general practice among high corporate officials of sucking their companies dry at the expense of their stockholders, workers and society.

Although perhaps it was the extremity of their companies' plight that led them into outright fraud, the inclination to use power and privilege not to serve but to be self-serving was not created by their companies' distress.

Had their companies remained viable we probably would never have discovered their plundering ways. Now the danger is that the prosecution of a few scapegoats from the likes of WorldCom and Enron, however deserved, will distract us from the deeper moral problems in our corporate world.

It is only on the dead that autopsies are performed. But the disease likely afflicts still viable companies as well.

If it weren't for former General Electric CEO Jack Welch's messy divorce, we wouldn't know of the incredibly extravagant perks (like his pension of $9 million a year for life) this former corporate hero extracted from his company.

But about most of the rest of the great corporations now left standing to dominate the American economy, we can only guess how much their executives acted like stewards of other people's fortunes and how much like parasites fattening themselves.

But we do have a clue. According to statistics that have appeared even in places like Business Week, the ratio of the pay of corporate CEOs to that of the average workers on the shop floor has skyrocketed during the past couple generations.

Back in 1950, that ratio was 20-1 and as recently as 1980 it stood at just over 40-1. By 2000, the bigwig in a major American corporation was making nearly 500 times what the little guy pulled in. This by itself should be a scandal, for there's good reason to believe it has more to do with the decline of corporate moral culture -- greed run amok -- than with an increase in the market value of executives.

For one thing, we've seen too many instances of executive compensation packages going through the roof even as their companies' fortunes were tumbling into the basement.

For another, with the evident "I'll-scratch-your-back-you-scratch-mine" relationship between many CEOs and their boards, it would be folly for us to imagine that the corporate boards treat their CEOs as employees subject to the same forces of "market justice" as the guys on the assembly line.

But beyond the manifest scandal of this increase in the ratio of pay levels, there's another question we should be asking: if these guys were willing to hand themselves such a disproportionate share of the loot above the table, what else were they willing to do under the counter to enrich themselves at everyone else's expense?

But we'll probably never find out. Although we may learn a lot about the shenanigans at Enron and WorldCom (and Tyco, and maybe Global Crossing, and ImClone), those companies strong enough to survive will likely keep their secrets.

In the 1990s, ABC News ran a regular feature about "The Fleecing of America." Perhaps it was part of the larger corporate campaign of the past 20 years to discredit government, but for whatever reason, ABC always chose to highlight some ill-conceived government program.

It was always as taxpayers that Americans got fleeced. Never as investors or workers or any other stakeholders in the private realm of corporate America.

Now, to our sorrow, and at the cost perhaps of some of those trillions, we learn that there's more than one way to fleece a nation.

Andrew Bard Schmookler is a writer who teaches American Studies at the Albuquerque Academy in New Mexico.

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